Most taxpayers de­clare monthly in­comes of less than 1,000 eu­ros

Kathimerini English - - Focus - BY THANOS TSIROS

While the Fi­nance Min­istryis con­sid­er­ing rais­ing the tax-free thresh­old for an­nual in­comes to 12,000 eu­ros, data from this year’s pro­cess­ing of tax dec­la­ra­tions, which Kathimerini has seen, show that there has been a mas­sive shift of the pop­u­la­tion from the up­per- and medium- to the lower-in­come brack­ets.

Of the to­tal 5.9 mil­lion in­come state­ments for the 2014 fi­nan­cial year sub­mit­ted by the end of Au­gust, some 3.7 mil­lion, or 62.82 per­cent, showed house­hold in­comes of less than 12,000 eu­ros.

Since 2010, when the coun­try en­tered the bailout pro­grams, the pro­por­tion of Greeks liv­ing on lower in­comes has grown by 14 per­cent­age points. In 2010 the num­ber of taxpayers with a fam­ily in­come of less than 12,000 eu­ros amounted to 2.78 mil­lion, al­most a mil­lion fewer house­holds than to­day.

If the min­istry does raise the taxfree thresh­old to 12,000 eu­ros, five out of eight house­holds in Greece would stop – ei­ther due to re­duced in­comes or tax eva­sion – con­tribut­ing to­ward in­come tax­a­tion, leav­ing the to­tal in­come tax bill (more than 8 bil­lion eu­ros per an­num) for the re­main­ing 2.2 mil­lion house­holds earn­ing more than 1,000 eu­ros per month to pay.

It is there­fore clear that the prospect of the tax-free thresh­old be­ing raised to 12,000 eu­ros has met with wide so­cial ac­cep­tance be­cause it af­fects the vast ma­jor­ity of house­holds, de­spite the fact that the per capita ben­e­fit is small, given that the tax-free thresh­old stands at 9,550 eu­ros to­day. On the other hand it would have a great fis­cal cost: Even if just 200 eu­ros is shaved off the tax­a­tion of each lower-in­come house­hold, the to­tal could rise up to 600 or 700 mil­lion eu­ros per year, as those ben­e­fit­ing from the mea­sure will num­ber be­tween 2 and 3 mil­lion house­holds.

Among the so-called lower-in­come brack­ets there are cur­rently prop­erty own­ers who make a liv­ing out of rents, as well as farm­ers and free­lance work­ers whose in­come tax rates are up to 26 per­cent from the first euro, so a rise in the thresh­old would hurt state cof­fers con­sid­er­ably.

The com­par­i­son of 2015 in­come data with those of 2010 is im­pres­sive: The so-called “haves” (i.e. those with an an­nual fam­ily in­come of more than 50,000 eu­ros) have shrunk from 244,844 in 2010 to 110,000 this year. The 30,00050,000-euro bracket hosts some 400,000 house­holds against 604,000 in 2010, while the so-called lower-mid­dle class mak­ing 20,00030,000 eu­ros per year num­bers just 555,000 house­holds from 752,000 five years ago.

The data also show that the mid­dle class (20,000-50,000 eu­ros) has seen its an­nual earn­ings drop 30 per­cent in five years.

The 2.2 mil­lion house­holds earn­ing over 1,000 eu­ros a month could be left with the to­tal in­come tax bill of more than 8 bil­lion eu­ros per an­num.

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